The Hindu Business Line : Videocon to leverage Thomson colour tubes units acquisition

THE Videocon Group's recent 240-million-euro purchase of Thomson SA's colour picture tube units in three countries — China, Poland and Mexico — seems to be a win-win deal for the group.

According to Mr V.N. Dhoot, Managing Director, Videocon International, the transaction would give Videocon an additional picture tube capacity of about 19 million units and provide a ready market for the company's glass shell production units in India.

"We have a total glass shell capacity of about 30 million units, which would now be supplied to the acquired facilities. We are already expanding our glass shell unit in Aurangabad. Further capacity expansion at the larger unit located in Bharuch will be carried out after a year," Mr Dhoot said.

Incidentally, Videocon is the largest manufacturer of glass shells for colour television picture tubes in the country. Post the acquisition, the Videocon Group has emerged as one of the largest colour picture tube makers in the world.

The implementation of these synergies with its Indian operations would also help the Group to control costs in the low-margin picture tube business. "We can produce glass shells at very low prices in India due to the comparatively low cost of Indian labour," he said.

The newly purchased Thomson units are supplying picture tubes to global consumer electronics majors, with key customers such as China's TCL and the Turkey-based Vestel.

Another key advantage of the deal is that it provides the Group with access to over 2,000 patents in the consumer electronics domain. This would enable the group to launch new products in India as well as in overseas markets. "In fact, we have already set up a line for plasma television at our unit in Italy, which we bought earlier this year from Thomson. We will soon be rolling out high-tech products such as LCD, plasma, slim tube and set up other flat panel display lines," he said.

In addition, market analysts point out that the financial impact of the acquisition on Videocon would be minimised as Thomson SA would be investing roughly the same amount in Videocon Industries and Videocon International.

Meanwhile, the Videocon Group is looking to achieve a turnover of Rs 18,000 crore this year, with roughly Rs 11,000 crore coming from its global operations.

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